Bahrain is not what many expect in a Middle East state. A
liberal, democratic island, Bahrain won independence from
Britain in 1971. It quickly became the banking centre for the
region, helped by its modern institutions and proximity to
Saudi Arabia's oil-rich east coast. In recent years it has
forged ahead as a financial centre, becoming a hub for Islamic
finance and setting up a free trade agreement with the US in
2006 – the first between the US and a Gulf state.
Key to its development has been one particular modern
institution – the Central Bank. Set up by the Bank of
England, it has driven reform for years and is generally
credited with maintaining Bahrain's position as the traditional
finance hub for the region.
One of the bank's recent reforms was its introduction of a
law to govern trustees and trust administration in August 2006.
This was an unusual move,...